The National Labor Court proved this week that it has become the "responsible adult." With Histadrut labor federation chairman Ofer Eini having no hesitation about shutting down the economy with a strike, and Finance Minister Yuval Steinitz refusing to concede anything until the sharp sword of the strike was at his neck, we needed a responsible adult who could see the entire picture and halt the downward slide.

For five solid hours on the night between Sunday and Monday, National Labor Court President Nili Arad tried to convince the parties to talk. She even said that calling a general strike now, before negotiations had been exhausted, would be disproportionate.

But then it became clear that Eini had hunkered down in his position. Arad, therefore, limited the strike to four hours, while ordering the parties to hold intensive negotiations. She was very aware of the grave effect a strike would have on the economy. Just Monday, the Finance Ministry published data showing a decline in tax revenues and a rise in the deficit due to the slowdown caused by the severe global economic crisis.

One must also realize that the Histadrut itself, along with the large unions that are its mainstay, does not have clean hands with regard to the massive influx of contract workers into the public sector. It is the Histadrut that sanctified the rigid employment practices found in the government, the local authorities and government companies. It created the situation in which every worker who enters the public sector and receives tenure becomes untouchable, someone who receives total protection from his union and the Histadrut no matter the circumstances, even if he isn't doing his job.

Not for naught does Shlomo Buhbut, chairman of the Union of Local Authorities, object to turning contract workers into direct employees of the local governments. He understands what this would mean when it comes to the level of services the cities provide.

The Jerusalem Municipality, for instance, wants to improve the city's cleanliness, and is therefore trying to outsource responsibility for this issue. But municipal employees object: They are demanding enormous monetary compensation in exchange for their consent.

Professor Amnon Rubinstein, a former education minister, once related that during all his years as minister, he succeeded in firing exactly one teacher - and only because the teacher never bothered coming to work. Yet even then, it took months of discussions with the Teachers Union, which repeatedly tried to evade the dismissal.

When the Education Ministry adopted the New Horizon reform, which greatly improved teachers' salaries, ministry clerks demanded a raise as well, even though the reform had nothing to do with them. When the government instituted a negative income tax in order to help those with low incomes, clerks in the Tax Authority demanded a raise. When the government tried to reform the Israel Lands Administration with the goal of marketing more land, and thereby lowering apartment prices, the workers held up the reform for two years because they demanded a raise and other changes in their working conditions.

The result is that public-sector executives - whether in the government, the local authorities or the government monopolies - are incapable of carrying out changes and reforms. Consequently, the level of public service has declined, while the prices of products supplied by the government monopolies have risen.

Those same unions that are now shedding crocodile tears over the bitter fate of the contract workers did not object to hiring such workers to do jobs that the regular workers refused to do, like cleaning or hauling. Yet they typically demanded that regular workers receive financial compensation for agreeing to allow contract workers in the door.

In both the collective wage agreement of 2007 and the package deal of 2009, Eini signed a commitment to give the state flexibility in managing its work force. But not one jot of this has actually happened. Therefore, the current negotiations between the treasury and the Histadrut must include a section on managerial flexibility in the public sector.

It's clearly necessary to improve the wages and benefits of contract workers, but the public sector must not stop the use of outsourcing, which provides both greater expertise and greater efficiency. This system is used throughout the Western world. If all of this can be achieved in negotiations between the treasury and the Histadrut, then good may yet emerge from this imbroglio. And Nili Arad will deserve the credit for a major improvement in the economy.

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